Trade with China shrank in 2020, deficit at five-year low

News: According to the data from China’s General Administration of Customs (GAC), India’s trade with China declined in 2020 to the lowest level since 2017, with the trade deficit narrowing to a five-year low as India imported far fewer goods from China.

Facts:

Source: The Hindu

 Data Related to Trade between India and China:

• • Bilateral Trade: The bilateral trade between India and China has decreased by 5.6% to $87.6 billion in 2020.
  • Imports and Exports: India’s imports from China shrank by 10.8% to $66.7 billion marking the lowest level of inbound shipments since 2016. However, India’s exports to China have jumped 16% crossing the $20 billion mark for the first time to a record high of $20.86 billion.
  • Trade Deficit: The trade deficit which shows the difference between exports and imports shrank to $45.8 billion, the lowest level since 2015.
  • What were the goods traded between India and China? There was no immediate break-up of the data for 2020. India’s biggest import in 2019 was electrical machinery and equipment worth $20.17 billion. Other major imports in 2019 were organic chemicals ($8.39 billion) and fertilizers ($1.67 billion) while India’s top exports were iron ore, organic chemicals, cotton, and unfinished diamonds.
  • Significance: The drop in India’s imports from China was largely due to a slowdown in the domestic demand in the wake of the pandemic. Hence, this makes it difficult to determine whether 2020 is an exception or marks a turn away from the recent pattern of India’s trade with China.

Data Related to China’s Trade with Other Countries

• Positive foreign Trade growth: China was the world’s only major economy to have registered positive growth in foreign trade in goods.
• ASEAN and EU: Exports to the ASEAN bloc, China’s largest trading partner in 2020 with bilateral trade amounting to $684 billion rose 6.7% while exports to the EU, China’s second-largest trading partner also rose 6.7% as total trade reached $649 billion.
• US: In 2020, the trade between China and US was up 8.3% to $586 billion with China’s exports rising 7.9% to reach a record $451 billion.
  • The trade surplus with the U.S expanded to $317 billion in 2020, compared with the $288 billion at the end of 2017 underlining the limited impact of the tariff measures, trade war and pandemic.

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